question archive A firm is considering financing its $20 million dollars of assets with one of two plans
A firm is considering financing its $20 million dollars of assets with one of two plans
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A firm is considering financing its $20 million dollars of assets with one of two plans.
Plan A consists of $3 million of debt with an interest rate of 6.6%, and 1.7 million shares
of common stock. Plan B consists of $10 million dollars in debt with an interest rate of
7.2%, and 1 million shares of common stock. The firm's tax rate is 30%. Calculate the
EBIT-EPS breakeven point, and then calculate the earnings per share at this level of EBIT
